Alternatives to Intellectual Property

I wrote a Quora answer to the question “What are the alternatives to intellectual property?” I cross-post it here.

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Let’s divide things into intellectual property (IP—patents, copyrights, trademarks) and non-IP intangible assets (NIPIA). NIPIA assets include all sorts of things—things you know but keep secret (broader than a trade secret), complexity, centrality in a network, quality of weak ties—who you know but who doesn’t know you really well—recognition of a distinctive opportunity, luck, likability, articulateness, timing, leverage (BATNAs—great alternatives to negotiated agreements), selectiveness of who you choose to deal with.

Let’s look at some of these bits of NIPIA. The idea of the patent developed in response to trade guild secrets. “Come to our city state with the secrets of your trade guild in a competing city state and we will give you a monopoly in our city state.” Later, the patent serves as an encouragement for inventors to both publish and teach inventions that might otherwise languish through disinterest—a sort of secret that’s not a trade secret because there’s no effort to prevent disclosure, just a disinterest. So, don’t blab what you know. Be selective who you show your ideas and your work to. A patent is a blab that gives people a chance to design around you, obtain patents to block development of your invention, undermine you, exclude you from standards.

Complexity is a wonderful bit of NIPIA. Composers can (and have) limited the opportunities of musicians to copy their work by composing works that only select musicians have the capability to play. If someone wants to practice for years to have the chance to join the elite few, more power to them. You know—Eddie Van Halen doesn’t need a copyright in “Eruption”—go ahead and try. More broadly, there is a “mystery” to excellent craft that transcends textbooks, published patents, and the like. The medieval craft guilds understood this, too. Magicians and card sharks know it. If someone rises to that level of excellence, those with excellence can see it, and those who lack the mystery usually cannot distinguish excellence from fakery.

Network effects can be valuable intangible assets. Centrality in a network is one such asset. Some things you might keep secret and not blab, and other things you make as open as you can—let them serve as beacons so that people find you, see what you are able to do, want to get connected to you and your work. So instead of controlling stuff or concealing it, you broadcast it in ways that help you connect with the people you want to work with. The world is a big place and you likely have no clue who you really ought to have met years ago. Putting stuff out into circulation is a good way to find people. In the big scheme of things, would you rather have a lot of patents or a lot of friends?

Network externalities also matter. People can derive value from the access they have to one another, enabled by what you have, what you are doing, what you make available. One telephone handset doesn’t have much value. A few billion handsets mean that each handset can reach many other handsets. In a similar way, even people talking about your exploits—celebrity status, any publicity is good publicity—can create social value that opens up opportunities. Including people, and allowing them to have a good time with each other, can do more for your future worth than excluding most of them and threatening the rest with litigation. Just saying.

Other network effects may also carry value. Congestion in a network means that people who want to work with you can’t necessarily get through. You become a kind of scarce item. Your value goes up. Herodotus tells the story of a ruler, Deioces, who became a recluse—and his subjects obeyed him for his mystery.

Consider, too, weak ties. This is Mark Granovetter’s concept. The people you know well and who know you well share much of the same information that you have. Your family and friends do less to inform you of really new things and serve more to keep you in your place—they mirror what they think should be your identity back to you. Folks who are more distant, it turns out, are often the source of way better opportunities. A friend who suggests that you, a musician (say), might consider an opportunity messing with ceramic cement might offend you with the implication that your musical skills aren’t for the bright lights. But someone you know only slightly can suggest pretty much anything because they don’t know you well enough to know what you are supposed to care about and therefore you can get ideas that aren’t pre-screened to be “appropriate” for you. Weak ties are better than friends in the opportunity seeking area, and friends are better than IP.

Luck also figures. Intellectual property is about control—exclude others, dictate terms of engagement, use planning, money, and contracts to impose your will on technology and markets. Luck doesn’t work that way. IP, in a way, is a great luck-destroyer. Once you declare ownership and exclusivity, sure, you “protect” something (your right to sue), but you also flush a whole lot of potential good will down the old drain. Being able to exchange practice ideas with other experts, for instance, goes down when people realize you have staked out positions and anything they offer you will slurp up but you are not going to reciprocate.

I once had a chief patent counsel for a major tech company call time out and lean into the negotiating table to explain that his job was to take everything that I couldn’t legally prevent him from taking, and my job was to find a way to stop him. Then back to negotiating. Oh, you think a patent would stop him? Har-har. No way we could have sued his company. Easy for them to design around us. The reality of his position was that we would be better not to deal with him. Oh, hey—that’s what happened. Boy were they pissed. But someone else got lucky because they were ready to deal.

Even something as simple as having good alternatives can allow you to move ahead with business or design ideas. Never get cornered or blocked, always have leverage, always keep a step ahead, always have a great alternative if someone doesn’t want to deal. IP can slow you down. IP is like building a big fort and declaring “everything that matters is in this fort—try to get it.” There are people in non-US countries that watch the US trademark principal register for new marks—and file parallel registrations in their countries and wait for what they take to be wealthy Americans to stumble across the borders of their countries—only to get trolled for the use of their marks. The trademark announces you long before you arrive, and lets people who want to exploit you set their traps. If you don’t have the baggage of IP, you can play a faster game, can swap out technology without regretting that $30K or $300K in patenting expenses, and aren’t tempted to drown your opportunities in a three or five or eight year legal battle with infringers.

And don’t discount personal traits—likability, articulateness, integrity, humor. People will deal with you, respect you, present opportunities because they like you, they want you to succeed. You don’t have to carry a bazooka around to enforce respect. People will offer it willingly. A lot of open projects operate that way. Sure, there is still the drama of people being the stubborn, wayward, mutable, emo things we are, but like families in sitcoms, they keep coming back for another episode because working together is better than alternatives. It doesn’t hurt to know how to “win friends and influence people.” If you can be persuasive, if you attract people with expertise, who want to work with you or for you, you can be out ahead of the people who depend on sluggishly laying legal land mines to defend territory and attract the kind of stoopid money that thinks IP land mines will protect their investments.

Oh, and we shouldn’t rule out threats, slander, hostage taking, and the application of physical harm. These are time-tested methods of controlling one’s competitors. “Lenny, here, will explain to you why you will agree not to make any more ice cream in this town.” Perhaps IP is to be preferred to thuggery—but I haven’t seen a case where IP is any defense to thuggery. “But Mr. Big, I have a patent on my ice cream maker.” Um, yeah. Pity if something were to happen to it.

Even without the overtones of organized crime, simply being strong has had a long history of success. Being strong allows one to induce fear in those who would oppose. And we have a propensity to defer to the strong, even when we perhaps shouldn’t. Being strong is as good as any piece of paper announcing your exclusive rights. Callicles, in Plato’s Gorgias, argues that laws were invented by weak people to deny the strong what is theirs by right. IP is based on laws. Connect the dots.

There’s a place for intellectual property, but that place isn’t nearly so big as some folks make it out to be. Patents are useful for enticing people with trade secrets to defect to new countries and for publishing new technology using language almost impossible to follow. Copyrights allow one publisher to beat back other publishers and for software programmers to prevent other software programmers from making modifications. And sometimes, that’s useful, such as when a code is designed to practice a given standard and no one ought to want anyone to be distributing a modified code that has been made incompatible. Trademarks deal with fraud in the marketplace.

But there is also a place for NIPIA. How one achieves one’s objectives depends on how one manages the mix of IP and NIPIA. There’s room for both—what to lead with, what follows, when to hold them, when to fold them, and when to run.